"Fayyad has said he will not remain head of the government, even if asked to stay in his post," a high-ranking official who requested anonymity told AFP, as the prime minister met Abbas at the president's headquarters in Ramallah.

Another official confirmed Fayyad's intention to quit, telling AFP, also on condition of anonymity, that Fayyad was "determined to resign."

Rumours that Fayyad would either resign or be told to step down by Abbas have been rife in recent weeks after longstanding differences between the two men came to a head over the finance portfolio.

Finance minister Nabil Qassis announced on March 2 that he was standing down. Fayyad agreed to the resignation but Abbas, who was abroad at the time, rejected it.

Fayyad held the finance portfolio as well as the premiership before Qassis's appointment last May.

A planned meeting on Thursday at which a senior Fatah official had said Fayyad intended to hand in his resignation was also postponed after Washington insisted that to the best of its knowledge the prime minister was "sticking around."

Late on Friday, US Secretary of State John Kerry contacted Abbas by telephone to discuss the crisis regarding Fayyad, according to Palestinian officials.

The international community gives US-educated economist Fayyad credit for building solid government institutions around the West Bank-based Palestinian Authority.

But he is considered by some in the Palestinian leadership to be too close to the United States and to Israel, where the liberal Haaretz newspaper once called him "everyone's favourite Palestinian".